One of my clients’ main concerns is what will happen with their stuff if they pursue a bankruptcy option to their situation. Their “stuff” includes their personal property such as cars, cash, bank accounts, and retirement accounts. It includes real property like homes and real estate. It also includes everything else—tangible and intangible as the courts like to say—which can include anything else including rights to inheritances, rights to payment in personal injury and other lawsuits, refunds on state and federal tax returns, as well as interests in businesses and joint ventures—no matter how small.
The good new is that the bankruptcy laws and the individual laws in each state help to protect some or in most cases all of your personal property through exemption laws. Exemption laws protect basic property of people who file bankruptcy or are subject to collection. In most cases, this covers ALL OF YOUR PROPERTY. For instance, bankruptcy is not like the old Tom and Jerry cartoon where Tom ends up bankrupt and the auction company takes all of personal belongings. In reality, the law wants you to keep your home, vehicles, furniture, clothing, and things like that. Further, in most cases people rarely lose any of their personal property when the go through with a bankruptcy. Bankruptcy also protects 401(k) accounts and IRAs.
If there is the potential for losing assets in a bankruptcy, there are ways to plan either for the continued ownership of the property or for the liquidation before bankruptcy. This gives you the most flexibility of results and the most bang for your buck.
What’s the hardest part of bankruptcy? Honestly, it’s making the decision to pick up the phone and call me to make your appointment to discuss your bankruptcy options. The rest is easy. Nobody will come to your house and inventory your things. Nobody will tell your friends and neighbors about your financial situation. It’s a cordial and civil process that we try to make as easy as possible.